High Court: Order for possession of property mortgaged under ‘lifetime loan’ not statute-barred

Proceedings seeking an order for possession of property mortgaged under a “lifetime loan”, which became payable upon death of the mortgagor, were not statute-barred as the proceedings were not subsisting at the date of death.

Finding that the proceedings were not subject to the two-year limitation period under the Civil Liability Act 1961, Mr Justice Garrett Simons said that the cause of action did not accrue until a demand for payment was made after the mortgagor’s death and, therefore, a twelve-year limitation period applied.

Lifetime loan

In 2007, Laurence Johnson entered into a mortgage agreement with Seniors Finance Ireland for the sum of €52,700. The loan agreement was a “lifetime loan” or “reverse mortgage” wherein Mr Johnson was not obliged to make any monthly repayments during the term of the loan – instead, the loan (with interest) would be repaid out of his estate following his death (or alternatively, if the mortgaged property was sold).

In December 2015, Mr Johnson died intestate. The right of the mortgagee to possession of the mortgaged property did not automatically arise on Mr Johnson’s death, instead, the mortgagee had to make a demand for repayment of the loan.

In July 2016, Senior Finance Ireland’s interest under the mortgage was transferred to WF Shap Ireland by deed of assignment and transfer. WF Shap’s ownership of the charge was registered on the folio in September 2016. In March 2017, WF Shap sent a letter to the legal personal representatives of Mr Johnson demanding repayment of the loan.

In November 2017, Donal Fingleton was appointed as administrator ad litem pursuant to Section 27(4) of the Succession Act 1965.

Thereafter, in February 2018, WF Shap sent Mr Fingleton a letter seeking repayment of €101,599.77. This demand remains unsatisfied.

Limitation period

In May 2018, WF Shap instituted the present proceedings seeking an order for possession of the mortgaged property. When the proceedings were initially listed before the Master of the High Court, the Master purported to make an order striking out the proceedings on the basis that they were statute-barred.

However, the Master had no jurisdiction to make this order, as any dispute as to whether proceedings are statute-barred is a matter for the High Court.

Considering whether the proceedings were statute-barred, Mr Justice Garrett Simons explained that an action to recover the possession of mortgaged lands is normally subject to a limitation period of twelve years under the Statute of Limitations 1957.

However, he added that “special rules apply… to limitation periods in respect of claims against the estate of a deceased person” pursuant to the Civil Liability Act 1961 (as amended). In particular, proceedings “in respect of causes of action which were subsisting on the death of a person must, generally, be brought within two years of the date of death”.

However, the present proceedings were not pending at the date of Mr Johnson’s death, and Mr Justice Simons was satisfied that, “under the terms of the mortgage, the making of a demand for the repayment of the principal monies” was a “condition precedent to the accrual of the right to apply for possession of the mortgaged lands”. As such, it followed that “the principal monies did not become payable automatically on the death of the mortgagor. Rather, a further step, i.e. the making of demand, was required”.

He said that since the making of demand was required under the mortgage deed before the repayment of the principal monies secured by the charge became due – then the cause of action did not accrue until such demand was made (Governor and Company of the Bank of Ireland v Matthews [2018] IEHC 335 applied).

Given that no demand had been made prior to the date of Mr Johnson’s death, the action to recover the lands was not subsisting as of that date.

Consequently, Mr Justice Simons concluded that the proceedings were not subject to the two-year limitation period under section 9(1)(b) of the Civil Liability Act 1961. Instead, they were subject to a twelve-year limitation period, and were instituted well within time.

Order for possession

Considering whether the requirements of section 62(7) of the Registration of Title Act 1964 were met, Mr Justice Simons said the evidence before him established that WP Shap “succeeded to the mortgagee’s interest under the Mortgage” and that the relevant deed of transfer had been exhibited.

Crucially, the registration of the mortgage as a charge against Mr Johnson’s interest in the lands, and WP Shap Ireland’s interest in the charge, were evident from the folio exhibited in the proceedings.

Mr Justice Simons said the monies were payable in circumstances where:

A triggering event has occurred, i.e. Mr Johnson’s death;

A lawful demand for repayment was made and not satisfied;

(No discretionary factors were put forward to justify refusal of the order for possession.

Satisfied that the conditions for the making of an order for possession under section 62(7) of the Registration of Title Act 1964 (as applied by the transitional provisions of the Conveyancing and Land Law Reform Act 2013) were fulfilled, Mr Justice Simons made an order for possession of the lands.